WHAT’S IN A NAME: THE FIXED STRUCTURE OF CHINESE COMPANY NAMES
12 April 2020 | China, Company Name, Introduction | Written by Dr. Richard van Ostende | Reading time: 7 minutes
When establishing a company first step to be undertaken by the founders is to select and apply for a company name at the branch of the Administration of Industry and Commerce where the company will be officially registered.
In China, company names are subject to a fixed form. In this article the main requirements company names must meet as well as the main restrictions and prohibitions that apply are discussed in detail.
STRUCTURE OF COMPANY NAMES
In China, company names are generally only registered in Chinese characters are subject to a fixed form. Company names consist out of four elements and organized a pre-defined structure:
[Registered location] + [Trade name] + [Industry] + [Organization type]
“Shanghai ABC Management Consulting Co. Ltd.”
Alternatively, foreign-invested companies have the possibility to place the Registered location after the Trade name or Industry, resulting in the following company name structure:
[Trade name] + [Industry] + [Registered location] + [Organization type]
“ABC Management Consulting (Shanghai) Co. Ltd.”
The registered location refers to where the company has been incorporated and formally registered at a branch the Administration of Industry and Commerce. This registration may be at local, municipal, provincial or state level.
Every company that has been registered in China holds a business license, which among others includes the business scope that describes the main business activities a company is allowed to perform. Under the industry section, the company name includes a brief description of the main activity in accordance with the National Standard Classifications of Industries.
The trade name is the name of the company the founders will chose when registering the company and usually consists out of two to four characters. Motivation for the selection of a Trade name can be diverse; the name can be related to the foreign parent company’s or group name, could be unrelated or could be chosen to convey a message of the founders.
The organization type indicates under which legal construct the company has been established.
When registering the company, founders will be required to provide multiple company names in case the selected company name is already in use, is too similar to another company’s name or does not meet the requirements or restrictions apply.
REGULATIONS ON COMPANY NAMES
With the aim to improve efficiency for enterprise name searching to support enterprise name registration process, in 2017 the State Administration published the Notice Regarding Opinions on Promoting the Reform of Enterprise Name Registration (Gong Shang Qi Zhu Zi  No. 54) “Circular 54”, as well as the Rules on Prohibited and Restricted Words to be used in Enterprise Names and Rules on Comparison of the Same/Similar Enterprise Names (Gong Shang Qi Zhu Zi  No. 133) “Circular 133”, which regulate the formulation of enterprise names.
The regulations make a distinction between general restriction rules, general prohibition rules and specific prohibition rules.
General restriction rules
In general terms when deciding on a company name, organization should:
avoid the use of a name that is similar with the name of an existing company or an approved name of a company engaging in the same industry with the same registration authority. Exception apply when the organizations are related.
avoid names that contain the name of a not-for-profit organization. Exceptions apply when the organizations are related, the not-for-profit legal entity / enterprise allows for the name to be used and the company name only contains an abbreviation or specific description of the organization.
avoid expression or implication in the company name that represents the company as a not-for-profit organization or activities beyond the purposes of the enterprise establishment.
not start the name with the wording of “China (中国)”, “Zhonghua (中华)”, “Quanguo (全国)”, “Guojia (国家)”, “International (国际)”. A foreign invested company that takes the name of its majority foreign shareholder may use the phrase of “China (中国)” in its name.
General prohibition rules
The general prohibition rules are implemented to avoid company name duplications, avoid the use of words in company names that may harm China’s national or social interests, avoid the use of inappropriate words that may lead to deceiving or misunderstanding as well as other miscellaneous prohibitions.
It is prohibited for companies to use a name of an organization that has active business operations in the same industry, has been registered or use a name that has been approved by the same branch of the Administration of Industry and Commerce where the company will be officially registered.
Avoid inappropriate words that may harm national or social interests
The following words are considered inappropriate
Words with negative or adverse political influences
Words involving terrorism, separatism, and extremism
Words that may undermine national dignity
Words with racial, sex and ethnic discriminations
Words with feudalism nature, violating good social conventions or showing no respect for ethnic customs and traditions
Words involving drugs, obscenity, pornography, violence, or gambling
Avoid inappropriate words that may lead to deceiving or misunderstanding
The following words re considered inappropriate
Words containing names of leaders of the Communist Party and government of the PRC, revolutionaries of the old generation, famous martyrs, or role models
Words containing illegal organizations, reactionary political figures, or well-known villains
Words containing reference to religious organizations or with obvious religious features
Other miscellaneous prohibitions
The following words re considered inappropriate
Words containing names of foreign countries (regions) and international organizations
Words containing names of political parties, organizations related to the communist party, mass organizations, social organizations, and designation of military units
Words containing foreign languages, letters, and Arabic numerals
Other words and contents prohibited by laws, administrative regulations and so on.
Specific prohibition rules
The company name should not be the name of administrative divisions, industries or structure of organizations.
In accordance with the main business activities of the proposed company, the industry or operational characteristics should be included in the enterprise name according to the National Standard Classifications of Industries. Prohibited industries prescribed by the laws, regulations and state council’s decisions should not be included in the company names.
The form of business organization of the company included in the company name should be consistent with its nature of business.
The administrative division included in the name of each company should be the name of the administrative division where the enterprise is located (county level or above).
State Administration for Industry and Commerce. (2017). Notice Regarding Opinions on Promoting the Reform of Enterprise Name Registration (Gong Shang Qi Zhu Zi  No. 54) “Circular 54”.
State Administration for Industry and Commerce. (2017). Rules on Prohibited and Restricted Words to be used in Enterprise Names and Rules on Comparison of the Same/Similar Enterprise Names (Gong Shang Qi Zhu Zi  No. 133) “Circular 133”.
The information in this article is intended for general information on the subject matter. The content of this article is not intended to replace professional advice on the subject matter in relation to your specific circumstances.
Copyright © 2020 R.A. van Ostende. All rights reserved.